Our DailyMarket Reports

Morning Gold & Silver Report – May 24, 2011

5/24/2011 8:21:00 AM By: Peter LaTona

CHINESE CITIZENS BUYING GOLD IN RECORD AMOUNTS - China bought more gold in the first quarter 2011, than the combined totals of the developed Western Nations. Demand in France, Germany and Switzerland increased triple-digits, yet China outpaced them all put together. The Chinese government made it legal to own gold in 2001 and since that time gold as an investment has increased 14% per year, but according to the World Gold Council, China’s gold demand per capita has doubled in the past five years. Despite this strong rise in per capita consumption, an analyst from Standard Chartered Bank said that there is still much room to grow, "In terms of gold consumption per capita, there is no doubt that [China and India] have a lot of catch-up potential and the impact on gold prices could be dramatic."

Moody’s is reviewing 14 United Kingdom lenders for possible downgrades. As British banks try to withdraw from government support, there is concern this will increase their credit risk. Government support has lifted the ratings of larger institutions by as much as two to five steps. Regulators are trying to devise rules whereby banks will no longer be bailed out by tax payers. If successful, then banks could give back the levels obtained by government support.

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